Val­u­a­tions com­ing down

Finweek English Edition - - MARKETPLACE - Ed­i­to­rial@fin­

As I write this, the Top40 has been trad­ing just be­low all-time highs but that just con­firms the range we’ve been trad­ing in since mid-2014, pretty much side­ways for two years. While this may be frus­trat­ing, you need to re­mem­ber two im­por­tant points: Firstly, within the Top40, many stocks are well above the 2014 lev­els while oth­ers are well be­low – it is about own­ing the right shares. Se­condly, if these shares are viewed as an in­dex, what we see is val­u­a­tions that have come down. P/Es re­duce by fall­ing prices or with flat prices and ris­ing earn­ings; we’ve seen the lat­ter al­though the in­creases in earn­ings have of­ten been mod­est.

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